Charter Gets Time Warner Cable Merger Approval, But the FCC Has Some Conditions
Last year, when Comcast wanted to buy Time Warner Cable, skepticism abounded about how the possible merger would affect the industry landscape, as well as how the combination of the top two most-hated companies in many customer surveys could affect consumers. The deal was eventually blocked by a combination of government regulators and challenges from policy makers.
The New Charter
On Monday, Charter Communications Inc. did what Comcast could not accomplish: it won U.S. antitrust approval for its $55 billion bid for Time Warner Cable Inc., along with the assent of Tom Wheeler, chairman of the Federal Communications Commission. The company's related bid of an additional approximately $10.5 billion for Bright House Networks was also approved, as the New York Times reported.
The new Charter Communications will become the second-largest cable company operating in the country.
It's still behind Comcast, but in its purchase of Time Warner Cable, Charter is gaining about 13 million new customers in major cities like Los Angeles and New York, bringing Charter's total customer base to about 23.9 million customers across 41 states, including cable, broadband Internet, or telephone service customers.
Restrictions for Approval
Charter won approval for its proposed merger only afer it agrees to some terms and conditions imposed from the FCC and Justice Department.
In a statement giving his go-ahead for the merger, FCC Chairman Tom Wheeler outlined the restrictions he's proposed should go along with the deal, most of which are related to the FCC's year-old redefinition of broadband as more of a utility than an information service and regulators' recent prioritization of neutrality towards online video streaming services.
"Based on imposed conditions that will ensure a competitive video marketplace and increase broadband deployment, an order recommending that the Charter/Time Warner Cable/Bright House Networks transaction be approved has circulated to the Commissioners," Wheeler stated.
He added that the following restrictions should be in place for seven years, in a move that he believes will benefit consumers and the streaming video marketplace
"First, New Charter will not be permitted to charge usage-based prices or impose data caps," wrote Wheeler.
"Second, New Charter will be prohibited from charging interconnection fees, including to online video providers, which deliver large volumes of internet traffic to broadband customers," he added.
Interconnection fees became a big issue in 2014 and 2015, as companies like Comcast began to charge a fee for video streaming services like Netflix to directly connect to their customers, which cuts down on buffering, signal loss, and other issues that consumers hate trying to binge watch their favorite shows.
Wheeler continued detailing the terms:
"Additionally, the Department of Justice's settlement with Charter both outlaws video programming terms that could harm [online video distributors, or OVDs] and protects OVDs from retaliation-- an outcome fully supported by the order I have circulated today," he wrote.
Finally, Wheeler stated that the deal was only approved on the condition that an independent monitor be in place to help ensure that Charter is following the proposed rules.
Are the FCC's Terms Strong, Long Enough?
Under the FCC's proposed terms, a potential 2 million customers could gain access to high-speed connection as well, and one million may have an option between two service providers.
But even with the proposed restrictions, there are detractors who say the merger will nonetheless be bad in the long run for broadband customers. One issue is that Wheeler's proposed restrictions could mean essentially nothing in the long run, since they're designed only to last for a finite period of time.
As Gizmodo quipped, "Well thank God the Internet and television is only going to exist for seven years. Otherwise, in less than a decade, a giant communications monolith would be legally allowed to do whatever it wanted to crush competition."
The implied point is that most of the country's broadband Internet will soon be run by either Comcast -- which hasn't generally shown itself to be particularly consumer or competition-friendly -- or the giant new Charter Communications, which after seven years will not be restricted from imposing its own interconnection fees, bandwidth metering rules, or data caps.
What do you think? Is this a good thing for the Internet or a step in the wrong direction? Let us know in the comments!
Subscribe to Latin Post!
Sign up for our free newsletter for the Latest coverage!